962 F. Supp. 2d 591
S.D.N.Y.2013Background
- Plaintiff Okey Azuike worked for Bank of New York (BNY) from 1998, later allegedly earning less than similarly situated coworkers and facing retaliation for complaints.
- He alleges discrimination, harassment, and retaliation based on color, race, and national origin, plus emotional distress claims.
- Plaintiff filed an EEOC discrimination and retaliation charge on Jan. 6, 2010, with allegations mirroring this suit.
- In July 2010, plaintiff filed a Chapter 7 bankruptcy, failing to disclose the EEOC claim, leading to a discharge in Oct. 2010.
- EEOC issued a right-to-sue letter on Apr. 6, 2012, and plaintiff filed this action on Jul. 3, 2012; defendants later sought Rule 11 sanctions and dismissal.
- Bankruptcy proceedings were reopened in Jan. 2013; the trustee abandoned the asset and the bankruptcy case closed in Mar. 2013.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars the suit. | Azuike seeks to pursue pre-petition claims despite bankruptcy filings. | Bankruptcy disclosure omissions prevent standing to sue. | Yes; complaint barred by judicial estoppel. |
| Whether Rule 11 sanctions against plaintiff are warranted. | Plaintiff acted in good faith; lack of awareness of bankruptcy obligations. | Sanctions warranted due to material misrepresentation risk and failure to withdraw. | Sanctions against plaintiff not warranted. |
| Whether Rule 11 sanctions against counsel Schewe are warranted. | Counsel acted reasonably under the circumstances. | Counsel failed to act promptly after being alerted to the bankruptcy issue. | Sanctions against Schewe not warranted. |
| Whether the court should impose sanctions under its inherent authority. | Inherent power not needed; case closed on Rule 11 grounds. | Inherent power available for bad-faith conduct. | Court declined to use inherent authority. |
Key Cases Cited
- Ibok v. SIAC-Sector Inc., 470 Fed.Appx. 27 (2d Cir.2011) (judicial estoppel and bankruptcy disclosure relevance in standing)
- Coffaro v. Crespo, 721 F.Supp.2d 141 (E.D.N.Y.2010) (bankruptcy disclosure and standing concerns)
- DeRosa v. N.Y. Envelope Corp., 595 F.3d 99 (2d Cir.2010) (two-step evaluation for judicial estoppel in bankruptcy)
- Margo v. Weiss, 213 F.3d 55 (2d Cir.2000) (standard for sanctions under Rule 11 involving objective unreasonableness)
- Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170 (2d Cir.2012) (Rule 11 sanctions standard and need for deterrence)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (inherent power to sanction for bad-faith conduct)
- Marx v. Gen. Revenue Corp., 133 S. Ct. 1166 (2013) (inherent power to award attorney’s fees in narrow circumstances)